Prime Minister Mark Carney and other Canadian prime ministers should be required to divest their investment portfolios when they assume office, not just put them in a blind trust, the House of Commons ethics committee recommends in a new report.
In its report made public Thursday morning, the committee said putting assets in a blind trust isn’t good enough, recommending instead “that the Government of Canada amend the Conflict of Interest Act that, for the application of subsection 27(1) the prime minister, as a reporting public office holder, is fully divested from their controlled assets through sale, since placement in a blind trust does not constitute true divestment.”
The committee also wants the law amended to require public disclosure of “high-level holdings categories placed in a blind trust by reporting public office holders (sector/asset class, and whether the holdings are Canadian-market concentrated),” a recommendation that could shed new light on the financial interests of a number of top officials and cabinet ministers.
In addition to the other responses, a blind trust is especially insufficient in this case, since his remaining Brookfield stock options are only be able to be exercised in the future, meaning the operator of the blind trust cannot buy and sell them as they would with any other asset.
In other words, Carney knows the schedule of those options becoming available for him to exercise (or for the blind trust to exercise, depending on the schedule and whether or not he’s still in public office at that point), and the blind trust operator has no control over that schedule.
Brookfield, incidentally, has a lot of money invested in places like Qatar and the UAE, as well as tens of billions invested in AI and data centres worldwide. The value of his stock options, therefore, is tied to the value of those investments.
THANK YOU!
This is the first substantive reason that anyone has given. I hadn’t thought about deferred maturation.
That said, if they can’t be exercised, that usually means he can’t fully divest himself of them, so he’d be facing the same issue.
In either case, I guess the answer would have to be something like setting a fixed payment structure on them (maybe tied to a TSX index).
At the extreme end, forcing him to abandon all non-vested options wouldn’t be the end of the world.
Honestly this is what I think should happen.
I mentioned this elsewhere, but Carney’s own book champions the idea of company managers/executives getting bonuses paid in things like future stock options, because he notes that it creates an incentive for that person to make decisions that are good for the company (or, I guess, for its stock price) on a longer time scale than “this quarter” or “this year”.
Well, turns out that same system also creates incentives for that person if they suddenly hop over into government. Carney only has himself to blame for this ending up as a conflict of interest.
If the trust cant sell them then he cant either?
I don’t see any reason why he couldn’t have signed away any claim on those stock options, or asked Brookfield to renegotiate things so he could cash out.
Some people might think it’s somehow unfair, but I mean, he wanted to be PM, no one made him do it.
Does the blind trust need his permission to renegotiate them though? Couldn’t they just do it?
Edit.
Or what if they costless collared them and effectively locked in the price on the date it went into the trust. Then it becomes this $x.xx is locked in at today’s price until you can exercise them, but you wont really make or lose any money on them between now and then.Edit: you need to own the underlying stock for the collar idea, not options.